ORDER
Lajja Ram, Member (T)
1. In this appeal filed by M/s. Perfect Circle Victor Ltd., the matter relates to the duty liability on the waste and scrap of Copper and Aluminium cleared by the appellants. The waste and scrap in question had arisen during the course of the manufacture of Gaskets -a motor vehicle part. The appellants had received duty paid Copper and Aluminium Metal, had availed of Modvat credit and sought to clear the Copper waste without payment of central excise duty under Notification No. 172/84-C.E., dated 1-8-1984 as amended by Notification No. 78/86-C.E., dated 10-2-1986. With regard to waste of Aluminium they sought exemption under Notification No. 182/84-C.E., dated 1-8-1984 as amended by Notification No. 79/86-C.E., dated 10-2-1986. The Collector of Central Excise (Appeals), Bombay denied them the exemption on the ground that under Rule 57F(4)(b) of the Central Excise Rules, 1944, they were required to pay appropriate duty on copper and aluminium waste.
2. The appellants have prayed for decision on merits.
3. On behalf of the respondent/Revenue, Shri M. Jayaraman, JDR contended that after the Modvat credit had been taken on the inputs, it could not be said that the waste had been manufactured from the goods on which the duty of excise had already been paid. It was his submission that the appellants were required to reverse the Credit already taken and that the waste was not eligible for clearance on the nil rate of central excise duty.
4. We have carefully considered the matter. The appellants were engaged in the manufacture of motor vehicle parts. In the proceedings, we are not concerned with the clearance of the motor vehicle parts. The matter relates to the clearance of waste and scrap of copper and a aluminium which had arisen during the course of manufacture of the motor vehicle parts, produced out of duty paid inputs. The appellants were availing of the benefit or Modvat credit. On receipt of the inputs, the Modvat credit was taken which was eligible for utilisation when the motor vehicle parts were cleared. During the course of the manufacture of the motor vehicle parts, the waste and scrap was generated. There is no dispute that the waste and scrap as such to be cleared was covered by the definitions of waste and scrap under the respective Tariff Entries relating to Copper and Aluminium.
5. Under Notification No. 172/84-C.E., dated 1-8-1984, the waste and scrap of copper was exempted from duty if it was manufactured from duty paid copper or products thereof. Similarly, under Notification No. 182/84, the waste and scrap of Aluminium was exempted from duty if manufactured from duty paid Aluminium and products thereof. On introduction of the new Central Excise Tariff under Schedule to the Central Excise Tariff Act, 1985, consequential changes in Notification No. 172/84 and Notification No. 182/84 -C.E., were made under Notification No. 79/86-C.E., dated 10-2-1986 (effective from 28-2-1986). The appellants sought to clear the waste and scrap of Copper and Aluminium under Notification No. 172/84-C.E. and Notification No. 182/84-C.E., as amended by Notification No. 79/86-C.E.
6. The Revenue had taken a view that under Rule 57F(4)(a) of the Central Excise Rules, 1944, the waste and scrap was to be cleared on payment of duty as if such waste and scrap was manufactured in the factory. The rate of duty as applicable to the waste and scrap will be the rate as applicable on the date of the clearance. On the date of the clearance, the waste and scrap manufactured out of duty paid inputs enjoyed exemption from duty. The Tribunal in a number of decisions had taken a view that the inputs do not cease to be duty paid even after the Proforma Credit/Modvat credit had been taken on such inputs. Of course when the inputs are cleared as such the relevant provisions provided for charging the appropriate rate of excise duty as if inputs had been manufactured by the manufacturer and the rate of duty will be as applicable on the date of the clearance and the duty will not be less than the amount of credit already availed of.
7. We find in the present case that the waste and scrap enjoyed exemption from duty. There is no dispute that the nil rate of duty is also a rate of duty. As there was no duty on Copper/Aluminium scraps manufactured out of duty paid inputs under the express language of the applicable exemption notifications, we consider that the appellants were clearing their Aluminium/Copper waste in terms of Exemption Notification No. 174/84-C.E., dated 1-8-1984 as amended by Notification No. 79/86-C.E., dated 10-2-1986 and under Notification No. 182/84-C.E., dated 1-8-1984 as amended by Notification No. 79/86 -C.E., dated 10-2-1986. The ld. JDR had referred to the subsequent Notification No. 246/87-G.E., dated 2-11-1987 under which the Notification No. 172/84-C.E. and Notification No. 182/84-C.E. had been amended and a proviso had been added to the effect that the benefit of exemption under Notification No. 172/84-C.E. and Notification No. 182/84-C.E. was available only when no Credit had been taken on the inputs from which such scrap had been generated or an amount equivalent to the Credit taken on the inputs had been debited back. He had submitted that this amendment was clarificatory in nature and the intention of the Act was clear that if Credit had been taken in respect of the inputs then the waste and scrap generated from such inputs (in respect of which Credit had already been taken and which in a way had become non-duty paid) was not to be allowed.
8. We consider that the amending Notification No. 246/87-C.E., dated 2-11-1987 could not be given retrospective effect in terms of the express language of the original Notifications. There is no clause giving the retrospective effect to the Notification No. 246/87-C.E., dated 2-11-1987. In these proceedings, we are not concerned with the period subsequent to 2-11-1987. In fact, the intention as reflected in the amendment on 2-11-1987 makes it clear that for the earlier period’, it was not a condition precedent for availing of the benefit under Notification No. 172/84-C.E. (as amended) and Notification No. 182/84-C.E. (as amended) that the benefit will not be applicable if Credit had been taken on the inputs from which such scrap had been generated.
9. As there was applicable Exemption Notification with regard to the waste and scrap, we consider that even in terms of Rule 57F, the appellants were eligible for the benefit of exemption separately provided to them.
10. Taking all the relevant facts and circumstances into account, we do not agree with the views taken by the ld. Collector of Central Excise (Appeals) and as a result, the appeal is allowed. Ordered accordingly.